Mobile data to overtake voice in Malaysia in 2017

Mobile data is expected to bring in more revenue than mobile voice in Malaysia in 2017, according to IDC.

Despite the penetration rate of Malaysian mobile users exceeding 140 percent and high prepaid-postpaid ratio, mobile operators have still been able to maintain their revenue growth. Total revenue has grown by 35 percent in the last three years, and IDC expects the revenue to continue to grow to RM27.6 billion in 2018 at a compound annual growth rate (CAGR) of 2.6 percent.

“Mobile data revenue will continue to grow strongly at CAGR of 8.5 percent and become the main driver of the total mobile revenue in the next five years,” said Alfie Amir, Research Manager of Telecommunications at IDC Malaysia.

“Mobile operators need to be proactive to the market trend by leveraging emerging technologies such as Internet of Things (IoT), big data, social and cloud, in order to continue to grow and stay competitive. Mobile operators may also need to revisit their spectrum strategy in order to maximize network capacity and enhance user experience,” he added.

IDC has identified three key areas that drive mobile data revenue in the next five years:

Mobile data users – Will grow at a strong CAGR of 11 percent, from only 57 percent out of total mobile subscribers in 2013 to 89% in 2018. The growth is mainly driven by the increase of low-tier smart devices and affordability of data packages.

Media contents – In line with the increase in device capabilities, media contents are getting richer and larger in terms of bandwidth. More media contents will be shared and downloaded due to the increase of Over-The-Top Player (OTTP) and social media. This will drive data demand hence higher data package will be required. OTTP has been a major challenge for mobile operators as it is competing with mobile operators’ traditional services and turning the network into dumb pipes. However there are cases where mobile operators could consider revenue-sharing partnerships with OTTP.

4G LTE – Four operators have launched LTE services as natural upgrades to their existing data packages without any premium charges. LTE subscribers have higher average revenue per user (ARPU) than 3G subscribers due to the higher data usage. This has been shown in countries with developed market such as Japan and South Korea. IDC predicts LTE subscribers in Malaysia to grow solidly from 265,000 in 2013 to 7.6 million in 2018. Higher speed and lower latency of LTE will enhance user experience, hence retaining existing users and attracting new users from competitors.

In countries with mature market such as Australia and South Korea, mobile data revenue has surpassed mobile voice and became the main driver of the total revenue. In Malaysia, although mobile data revenue is growing steadily, mobile voice still accounts for up to 60 percent of revenue.